Question 1

The Fed uses ________ to regulate the money supply.

Accepted Answer

A)   stock market investments
B)   the deposit requirement
C)   the political negotiation process
D)   the discount rateE) B) and D)
F) B) and C)

Question 2

Traditionally, banks provide loans to individuals and companies according to the recipient's

Accepted Answer

A)   future earnings potential.
B)   family history.
C)   volume of credit already established.
D)   creditworthiness.E) C) and D)
F) None of the above

Question 3

The board of governors of the Federal Reserve System determines

Accepted Answer

A)   exchange rates.
B)   U.S. monetary policy.
C)   inflows and outflows of gold reserves to ensure a stable money supply.
D)   how much money the U.S. will loan to foreign governments.E) A) and B)
F) None of the above

Question 4

Pension funds are monies put aside by corporations, nonprofit organizations, or unions to fund the financial needs of their employees, upon retirement.

Accepted Answer

A) True 
 B)False

Question 5

Recently, the Fed announced a reduction in the discount rate and the reserve requirement. These actions clearly suggest that the Fed intends to decrease the money supply.

Accepted Answer

A) True 
 B)False

Question 6

The World Bank primarily finances projects to improve the productivity and standard of living in less-developed nations.

Accepted Answer

A) True 
 B)False

Question 7

Commercial banks operate as nonprofit institutions.

Accepted Answer

A) True 
 B)False

Question 8

The Federal Reserve assists in the processing of checks between banks.

Accepted Answer

A) True 
 B)False

Question 9

The World Bank provides funding for

Accepted Answer

A)   the developed nations in Europe and Asia.
B)   firms that want to participate in international trade but lack foreign exchange.
C)   multinational corporations that have a strong credit rating.
D)   projects to improve the standard of living in less-developed nations.E) A) and C)
F) None of the above

Question 10

While Federal Reserve actions impact domestic investors, they have little effect on decisions made by international investors.

Accepted Answer

A) True 
 B)False

Question 11

Created during the Great Depression, the federal deposit insurance program resulted in a large number of bank failures.

Accepted Answer

A) True 
 B)False

Question 12

The organization responsible for conducting monetary policy in the United States is the

Accepted Answer

A)   Federal Trade Commission.
B)   Council of Economic Advisors.
C)   Federal Reserve System.
D)   Federal Monetary Control Authority.E) All of the above
F) B) and C)

Question 13

The World Bank primarily finances projects to protect the environment.

Accepted Answer

A) True 
 B)False

Question 14

Timothy has $42,000 in a savings account with the Jefferson Credit Union. While economic conditions have caused financial institutions to struggle, Timothy feels that his money is safe due to the fact that the credit union's accounts are protected by the

Accepted Answer

A)   Federal Deposit Insurance Corporation (FDI
C)  .
B)   Credit Union Insurance Fund (CUIF) .
C)   National Alliance of Credit Union Underwriters (NACUU) .
D)   National Credit Union Administration (NCU
A)  .E) All of the above
F) None of the above

Question 15

The banking panic of 1907 and the resulting cash shortage led to the formation of the

Accepted Answer

A)   Federal Reserve System.
B)   Comptroller of the Currency.
C)   gold standard for currency, and the establishment of a gold repository at Fort Knox.
D)   FDIC.E) A) and B)
F) A) and C)

Question 16

Which of the following represents one way the Fed increases the amount of money in circulation?

Accepted Answer

A)   reduce taxes
B)   raise the discount rate
C)   buy government securities
D)   increase the reserve requirementE) A) and D)
F) B) and C)

Question 17

Commercial banks, savings and loan associations, and credit unions all represent components of the American banking system.

Accepted Answer

A) True 
 B)False

Question 18

It's no secret these days that the People's Bank of China is fat with cash from the increasing rate of Chinese exporting. As a smart player on the global stage, which of the following strategic decisions will the People's Bank of China probably make on a daily basis?

Accepted Answer

A)   Invest its free cash in the securities of other nations whose interest rates remain at a low and acceptable rate, for a long period of time.
B)   Limit its global investment of free cash, and continue to invest in the construction trade in China, to build more factories, while providing its clientele with the highest possible interest rates.
C)   Invest its free cash in the securities of other nations that do not participate in the same type of industries such as soft goods and electronics.
D)   Invest its free cash in the securities of other nations where it can get the highest available interest rate, for the shortest period of time.E) A) and B)
F) C) and D)

Question 19

A barter exchange is a system where you input into a system the goods and services that you are willing to trade, and receive trade credit.

Accepted Answer

A) True 
 B)False

Question 20

Since the Great Depression, the Bank of Bramblewood has the FDIC designation. What does this mean?

Accepted Answer

A)   The bank is a member of a consortium of banks that can pool funds to make loans too big for any single bank to finance.
B)   The bank gives preference to veterans.
C)   The depositors of the bank are also its owners.
D)   Individual accounts at the bank are insured by an independent agency of the federal government.E) A) and B)
F) A) and C)

Exam 20: Money, Financial Institutions, and the Federal Reserve

The Fed uses ________ to regulate the money supply.

Correct AnswerverifiedShow Answer

The World Bank provides funding for

Correct AnswerverifiedShow Answer

The organization responsible for conducting monetary policy in the United States is the

Correct AnswerverifiedShow Answer

It's no secret these days that the People's Bank of China is fat with cash from the increasing rate of Chinese exporting. As a smart player on the global stage, which of the following strategic decisions will the People's Bank of China probably make on a daily basis?

Correct AnswerverifiedShow Answer

Which of the following represents one way the Fed increases the amount of money in circulation?

Correct AnswerverifiedShow Answer

Since the Great Depression, the Bank of Bramblewood has the FDIC designation. What does this mean?

Correct AnswerverifiedShow Answer

A barter exchange is a system where you input into a system the goods and services that you are willing to trade, and receive trade credit.

Correct AnswerverifiedShow Answer

The banking panic of 1907 and the resulting cash shortage led to the formation of the

Correct AnswerverifiedShow Answer

Commercial banks, savings and loan associations, and credit unions all represent components of the American banking system.

Correct AnswerverifiedShow Answer

Recently, the Fed announced a reduction in the discount rate and the reserve requirement. These actions clearly suggest that the Fed intends to decrease the money supply.

Correct AnswerverifiedShow Answer

Traditionally, banks provide loans to individuals and companies according to the recipient's

Correct AnswerverifiedShow Answer

The World Bank primarily finances projects to protect the environment.

Correct AnswerverifiedShow Answer

The Federal Reserve assists in the processing of checks between banks.

Correct AnswerverifiedShow Answer

Timothy has $42,000 in a savings account with the Jefferson Credit Union. While economic conditions have caused financial institutions to struggle, Timothy feels that his money is safe due to the fact that the credit union's accounts are protected by the

Correct AnswerverifiedShow Answer

Created during the Great Depression, the federal deposit insurance program resulted in a large number of bank failures.

Correct AnswerverifiedShow Answer

The board of governors of the Federal Reserve System determines

Correct AnswerverifiedShow Answer

While Federal Reserve actions impact domestic investors, they have little effect on decisions made by international investors.

Correct AnswerverifiedShow Answer

Commercial banks operate as nonprofit institutions.

Correct AnswerverifiedShow Answer

Pension funds are monies put aside by corporations, nonprofit organizations, or unions to fund the financial needs of their employees, upon retirement.

Correct AnswerverifiedShow Answer

The World Bank primarily finances projects to improve the productivity and standard of living in less-developed nations.

Correct AnswerverifiedShow Answer

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